The European Court of Justice (ECJ) is due to release a ruling this week that could help define the success of the UK’s trade negotiations with the European Union.
On Tuesday, the court will decide whether all 38 EU national and regional parliaments will need to approve the 2014 Singapore Free Trade Agreement.
The EU’s highest court is expected to rule that the 38 parliaments will need to ratify the deal, rather than the European Commission being given full authority, after the ECJ’s advocate general Eleanor Sharpston argued this should be the case last December.
A ruling giving all 38 parliaments a veto would mean the status quo is maintained, leaving the door open for a repeat of the near-collapse of the EU-Canada trade deal, which was initially voted down by Belgium’s Walloon parliament.
In the unlikely event that the ECJ rules the commission can pass the trade agreement alone, a new precedent would be set, altering the Brexit negotiating landscape.
“We are expecting to have to go through this complicated ratification procedure, where it goes through not only the national state member governments but equally the regional ones. And we could have a Wallonia situation,” Open Europe’s Aarti Shankar told City A.M.
“The really interesting part of this case is if the ECJ decides against the opinion [of the advocate general] and decides this comprehensive trade deal can be concluded just as a straightforward EU-only deal, that sets a new precedent. That would be quite a new thing, and it could suggest that if the UK were to go for an ambitious trade deal, it could still avoid a very complicated, drawn-out ratification procedure.”
Shanker Singham, director of economic policy and prosperity studies at the Legatum Institute, said: “Assuming the court case follows the earlier advocate-general’s opinion, then it will set out what are the bounds of EU competence and what properly belong to member states in trade negotiation.
“We will know that a trade deal that covers goods, services, most of investment (but not portfolio investment) and some government procurement will be within the EU’s competence, but areas like labour and the environment would be member state competence. If the EU wants to negotiate deals that include all of these, then such a deal would have to be ratified by all member states, and that will make it harder for the EU to ratify such deals.”
He added: “However, if the deal does not include those areas, we will have clarity that it is EU competence and can be ratified through simple majorities of member states and the parliament.
“This might be good for the UK both in terms of its UK-EU trade agreement, and because it will mean that it is easier for trading partners to negotiate comprehensive agreements with the UK than with the EU.”